Fairfax’s commercial real estate market perks up

When Tysons-based Iridium Communications went looking for a new office headquarters in late 2024, CEO Matt Desch had a list of priorities for the satellite company’s next home.

The company needed more space to accommodate its growing staff, for one thing. Iridium, which employs more than 1,000 people across the globe, including more than 300 in Tysons, had simply outgrown its space at 1750 Tysons Blvd., where it has occupied about 35,000 square feet during the last 15 years.

“We found ourselves really constrained at times with too many people, and also our offices were really set up the way we all worked 15 years ago,” Desch says.

Staying in Tysons was also key. Just off the Dulles corridor, Tysons provides easy accessibility to Iridium’s government and technology customers as well as its workforce, and it’s a short walk from Aireon, a joint venture between Iridium and Nav Canada that provides space-based air-traffic monitoring services.

Tysons, with multiple Metro stops along the Silver Line, is also a draw due to its residential, entertainment, retail and dining amenities, including The Boro, a 6-year-old high-end mixed-use development that aims to create a walkable neighborhood. Iridium’s new home at 1676 International Dr., a 13-story building where it will occupy 55,000 square feet, is less than a mile from its current headquarters and closer to the Boro’s amenities.

But Desch also envisions the company’s new home as a “destination for its many partners,” an integrated space to foster collaboration and where it will have the ability to demonstrate its high-tech capabilities.

“I wanted this to be a showcase for people visiting of the breadth of our innovation, but it also reflected the culture that we have created over that time that made us successful,” Desch says.

The office real estate climate was right for the company to move, too. Iridium looked at more than 20 high-end properties during its seven-month search for a new home. The company announced in May 2025 its headquarters move, which includes an investment of more than $13 million and adding more than 100 jobs. It’s set to move in March.

“This is a good time to look for space. It was an environment where we could get what we thought to be a pretty good deal,” Desch says, though he declined to specify financial terms. “There were a number of very good properties, all of which were challenging to pick between.”

Flight to quality

The commonwealth’s most populated county, Fairfax is home to more than 1.1 million people, and it’s become a symbol of Northern Virginia‘s growing cachet in the defense and technology industries, with a large concentration of government contractors based in the county. Fairfax is home to more than 10,000 technology companies and dozens of corporate and North American headquarters for multinational firms, including 11 Fortune 500 companies and 120 businesses that landed on the Inc. 5000 list of the nation’s fastest growing private companies.

While numbers vary depending on tracking, Fairfax County has about 120 million square feet of office space, making it the largest office market in the state as well as the Washington, D.C., region, and it includes a range of submarkets, from marquee regions like Tysons, Reston and Herndon, which are home to big-name corporate headquarters, to Springfield and Fort Belvoir, which may be more associated with federal three-letter agencies.

Fairfax, like much of Northern Virginia, has also felt outsized impacts of the Trump administration’s downsizing of the federal workforce through layoffs. Cancellations of thousands of federal contracts has led to major private sector job cuts. Fairfax-based Booz Allen Hamilton, Leidos, Mitre and Peraton each announced layoffs in 2025, amounting to thousands of jobs cut.

While it’s unclear how many federal workers living in Virginia, and specifically Fairfax, have lost their jobs, the state reported in September 2025 that the federal government had cut 8,700 jobs in the state, a 4.5% decline, between August 2024 and August 2025. Professional and business services, a category that includes many govcon positions, lost 8,000 jobs during that same period, a 1% decline.

Job losses, tariffs on building materials and elevated interest rates have hit Fairfax’s office market over the past several years, although return-to-office orders have helped stem the tide of financial losses.
Nick Gregorios, a principal at the Tysons office of commercial real estate firm Avison Young, says many employers are wrestling with decisions over investing in office space.

“I would say that there’s still a lot of uncertainty, and there’s still plenty of companies that are sitting on the sidelines, but they’re also a lot more now that … there’s never going to be a perfect amount of data,” Gregorios says. “They’ve seen enough, and they understand that long term, that they still need office space.”

Fairfax’s overall office vacancy rate has edged up slightly in recent years, from 17.2% in 2023 to about 18.4% at the end of 2024, according to Fairfax Board of Supervisors Chair Jeff McKay, citing the most recent county data available. Leasing activity, including new and renewed leases, reached 30%, totaling about 7 million square feet in 2024, up from 6.2% in 2023 and 6.6% in 2022.

“It’s not like that number is going down, so that tells us there’s still a lot of interest in staying in this market,” McKay says. “There’s still a lot of people interested in coming into this market.”

While uncertainty remains and the Fairfax office market has stayed soft, there are signs of tightening or stabilizing. Demand for Class A and trophy office space remains high as tenants trade up from aging spaces in a “flight-to-quality” trend as they seek new and improved amenities.

“Obsolescence is a real thing,” says Nathan Edwards, senior director of research for the mid-Atlantic and Southeast regions at commercial real estate company Cushman & Wakefield. “The flight to quality is real.”

Meanwhile, new construction is at a standstill. According to Cushman & Wakefield’s 2025 third-quarter market report, Reston-based Comstock completed delivery of the second of two trophy office towers in its $1.2 billion, 1.6 million-square-foot mixed-use Reston Row development, the only new office delivery in 2025. No other office groundbreakings are anticipated, and Reston Row has been a hot ticket, with much of the space claimed.

In November 2025, Fortune 500 contractor Booz Allen Hamilton announced it will move its Tysons headquarters to Reston Row in 2027, where it will downsize from 428,000 square feet to 310,000 square feet.

In a statement, Booz Allen Chief Operating Officer Kristine Martin Anderson said the new headquarters “will provide our people, partners and customers with upgraded resources to build the technologies that support national missions while rightsizing our facilities footprint.”

Reston has made headlines for other high-profile tenant relocations in 2025 as tenants seek upgrades, although sometimes in smaller footprints. In January 2025, vehicle data company Carfax announced plans to move its headquarters from Centreville to 87,000 square feet in Reston Station. During the second quarter, nonprofit government contractor Noblis inked a deal for about 75,000 square feet at Reston Next, an extension of Reston Town Center, less than half the size of its current headquarters of 160,000 square feet.

But Workday, the California cloud software company, is growing its headquarters from 15,000 square feet in Tysons to more than 51,000 square feet on two floors in Reston Town Center, it announced in October 2025.

The move, planned to be completed this spring, aligns with the company’s doubling of its Northern Virginia headcount to more than 400 people with the launch of Workday Government as a standalone subsidiary, says Matthew Cornelius, managing director for Workday Government.

While the company, which operates on a 50-50 hybrid schedule, looked for a new home in Northern Virginia, Workday zeroed in on its new location for its proximity to federal customers, as well as the desire to attract talent. The new location will allow for greater collaboration with industry and government customers, and it has a more community and campus-like feel, similar to Workday’s Pleasanton, California, headquarters, Cornelius says. There are more walkable options for food, too.

“We do want to create spaces that our employees want to show up to, and they want to be there, and they want to cross-pollinate,” he says.

‘Transformation mode’

While some tenants are flocking to updated and upgraded spaces with more bells and whistles, at the other end of the spectrum, Fairfax is feeling the weight of offices that Gregorios calls “nonperforming,” empty buildings that landlords and banks can no longer maintain.

Higher vacancy rates equal lower lease values, McKay says. Fairfax’s office property values, which are based on rent, dropped $1.35 billion from fiscal 2024 to fiscal 2025, according to county data, from an assessed value of $18.03 billion in 2024 to about $16.74 billion, or about a 7.2% decline. Nonetheless, that’s an improvement over the previous year, when values dropped 9.09%.

“This is a transformation mode,” says Victor Hoskins, CEO and president of Fairfax’s economic development authority. “We’ll probably take down 4 [million] or 5 million square feet over the next five, six, seven years, and that will be replaced by mixed uses.”

Some of that transformation could come in the form of adaptive reuse of buildings, which Fairfax sought to accelerate in 2018 through the introduction of incentives and streamlined zoning. As many as 8 million square feet of office space has been proposed for demolition, and since 2014, Fairfax has approved seven applications to repurpose 12 former office buildings into residential uses.

Gregorios predicts more buildings may be slated for adaptive reuse, creating greater demand for existing office space. Meanwhile, he says he’s seen an uptick in prospective tenants seeking space to lease, including out-of-market companies that may be looking to dip their toes into the market by taking up smaller spaces.

Of the 20 largest real estate deals in Fairfax in 2025, Gregorios says the average space leased totaled about 53,000 square feet, or two building floors, similar to Workday Government, with terms running about nine years. That’s a positive sign, he says.

“If the average term is nine years, that’s pretty good,” Gregorios says. “And, by the way, that has been, I would say, gradually going up year over year, over the past five years. It’s getting closer to the more historical norm than it was in the past.”

Fairfax County at a glance 

Located about 20 miles south and west of Washington, D.C., Fairfax County was established in 1742; the City of Fairfax, the county seat, was incorporated in 1805. The state’s most populous county, Fairfax is an epicenter for many of the state’s technology companies and is also home to George Washington’s Mount Vernon estate. Eleven Fortune 500 companies are based in Fairfax County, including defense contractors General Dynamics and Northrop Grumman. George Mason University, one of the most diverse colleges in the country, is also in the county.

• Inova Health System
• Amazon.com
• Booz Allen Hamilton
• Capital One Financial
• Freddie Mac
• General Dynamics
• Navy Federal Credit Union
• Science Applications International Corp. (SAIC)
• Mitre
• Peraton

• Freddie Mac
• Capital One Financial
• General Dynamics
• Northrop Grumman
• Leidos
• Hilton Worldwide
• NVR
• Booz Allen Hamilton
• QXO Building Products
• CACI International
• Science Applications  International Corp. (SAIC)

• Archer Hotel Tysons
• The Watermark Hotel

• Westfields Marriott Washington Dulles, 59,538 square feet of event space,  336 rooms
• Hyatt Regency Reston, 32,000 square feet of event space,  518 rooms
• The Ritz-Carlton Tysons Corner, 23,778 square feet of event space,  398 rooms

• 2941 Restaurant, French-meets-American, 2941.com
• Chosun Hwaro, Korean barbecue, chosunhwaro.com
• Clarity, Modern American, clarityvienna.com
• Wren Tysons, Japanese, wrentysons.com